Why Low Cost Organic Produce is Bad for Small Farmers

Honey May Nectarines

For years organic farmers ran small-scale operations because of the intense amount of attention and time involved in growing organic produce. Recently, say in the past 10 years, there have been great strides in research on pest control and more efficient organic farming practices (See post Organic is More than What You Eat). This has made it possible for the big guys to get into the market. This has also resulted in lowering the prices of organic produce due to supply and demand.

This creates a conundrum for supporters of small family farms. How so? The big guys can sell their produce for less since they have such large quantities. They can glut the market and bring down prices for all organic farmers. They are less vulnerable to such market changes since they usually grow large acreage of conventional produce as well. The small- to mid-sized family organic farmers cannot weather the price wars so easily.

The larger corporate farms can purchase materials in bulk for less. Small farmers have to pay full price. Add to that the price of labor. Last year there was a labor shortage in our area. The large packinghouses increased their wages to attract workers. For the first time in our 38 years of farming, we could not get enough help. So, we had to raise our wages so as not to lose the employees we had.  This was great for the farm laborers, but tough for the smaller farmers.

Food safety is another conundrum. Who can argue with the need for a safe food supply? The large guys have lawyers and can hire special personnel just to handle the paperwork and training necessary to comply with the new federal food safety regulations (FSMA). Us little guys have to do all the paperwork ourselves which takes us away from the fields which means we can’t keep as close a watch on our crops which means the quality may suffer.  Thankfully there are two of us to shoulder the work load.  Some small farmers are single, though, and this new legislation has caused many to quit farming altogether.

Consumers and growers of organic produce often also support food justice issues. Low cost organic food is essential to helping underprivileged communities gain access to nutritious and safe food. On the other hand, small- to mid-sized family farms, like any business, cannot continue unless the sales price exceeds the cost of putting it in the box. That is why a recent survey found that the majority of small farmers do not have farming as their only source of income. Many work an off farm job just to keep farming.

Here is a list of costs and expenses for us to grow, pick and pack our fruit. Think about what your family spends on some of these items and multiply that by 100 (approximately how many acres of trees we have).

Water is used nearly year-round to irrigate the trees and we are charged both by use and number of acres.
Electricity is used to run the pumps to get the water to irrigate the trees.
Fuel is used for tractors, trucks and forklifts as well as weed eaters.
Labor: We pay 20 workers $9.00 per hour for 10 hours per day 7 days a week during harvest plus overtime.
Farming materials: Compost, other organic soil and tree supplements, organic pest control materials
Farm upkeep: Planting new trees, leveling the fields, spreading compost, removal and grinding of old trees
Maintenance: Oil changes, parts for fixing equipment, labor for fixing equipment, cleaning equipment
Packing materials: boxes, pads, fruit trays, pallets, stickers and sticker guns
Portable Restrooms and maintenance, shade tents and water jugs
Food Safety: Minimum of $200 per hour for annual inspections that take up to 8 hours to complete
Organic Certification
Insurance for workers, farm vehicles and liability
Mortgage Payment

The prices on most of these expenses has increased steadily over the years.

Approximate cost (taking the above expenses into consideration) to put fruit in the box: $16.00 per box
Income: Average of $28.00 per 2 layer lug box (average 56 pieces of fruit per box)
Approximate net income: $12.00 per box

Now consider we have the usual household expenses as well.

Farmers are experts at pinching pennies. Our pennies are getting pretty thin.

Are You Willing to Accept Less Food Choices?

Those of you who have been following us or who have read our farm story know that we pride ourselves in growing and packing the best quality fruit possible. This takes a lot of time, work and energy. So, it is very discouraging to us that people no longer feel they can trust farmers due to the recent food-borne illness outbreaks.

We sell most of our fruit wholesale to retailers who increase the price to suit their profit margin. Our asking price per box is based upon how much it costs to produce a quality box of fruit. This means the cost of production including maintaining and repairing our equipment, organic materials to help prevent pests from ruining our crops, electricity for pumping irrigation water, mortgage payments, labor, packing boxes and supplies, fuel for deliveries, etc. Labor went up $1.00 per hour this year around here due to the labor shortage. Also, the Alta Irrigation District will begin charging farmers for water usage in the near future.

On top of all this, the Obama administration has decided to do something that has never been done before in the United States. Farmers will now be required to have their farms inspected to ensure they are following good agricultural practices (GAPs). The Food Safety Modernization Act (FSMA) was signed into law in 2011 by President Obama to address, in a proactive way, the occurrences of food-borne illness outbreaks to quell consumers’ concerns. Unfortunately, all policies have unintended consequences. Those who drafted FSMA must have had large farms or corporate farms in mind because the paperwork required to comply with the regulations is enormous, at least it seems so for mid- to small-sized independent farmers like us. Also, it costs a great deal to implement the changes required. Large farmers who have accountants or lawyers to do the paperwork are only out the expense. But, as the old saying goes, “time is money,” too.

Some old fart farmers are blessed with sons and/or daughters that are following in their footsteps and can handle some of the paperwork. We are blessed with an awesome crew that works hard and does an amazing job, but the two of us do most all the maintenance, deliveries, agricultural inputs, irrigating, (mostly Mike) and paperwork (mostly Nori) ourselves. The food safety requirements have increased the paperwork exponentially in the past two years. I worked from 6:00 AM to 9:00 PM on our GAPs policy alone yesterday. And FSMA has not even been finalized, yet.  The comment period has been extended to September 16th.

There are some food safety advocates that are upset that it is taking so long to get FSMA passed. These same advocates tend to be supporters of local food and small farmers. What they don’t realize is that many mid- to small-sized farmers are finding FSMA a nightmare. FSMA determines the size of farm by the gross income, not amount of land. Since we sell our fruit commercially, the stores who purchase our fruit are requiring us to be 3rd part certified already, regardless. This means that we have to pay a private company or the USDA to audit our food safety plan. The minimum cost is $199.00 per hour and the audit usually takes 3 to 4 hours.

The bottom line is, we have ripe fruit ready to pick and few companies to sell it to unless we are certified ~ even though we are certified organic and have never experienced a food-borne illness outbreak from our farm. For us, this means a huge loss unless the companies will give us more time (and, of course, they will not likely pay us any more for our fruit).

For the consumer, this will mean fewer choices at the market. As I say in my blog post What Do Consumers Want? consumers can’t have it all. Buying local does not help rural farmers like us who are in the agricultural belt of California where Fresno is the largest local market. We depend upon consumers in other cities and states to purchase our fruit in order to make ends meet.

We are seriously considering our choices for the future. If you want to talk social security, our farm is our retirement. We hoped to keep farming for at least ten more years, but, with some stores that usually purchase our fruit refusing to do so this year without proof of GAPs, we may have to make some very difficult choices regarding our ability to keep farming.

This year, the consumer will likely not notice much difference in the stores because there was a good set for stone fruit. Last year there was a shortage due to weather-related issues. The fluctuation in the availability of fruit from year-to-year means the real impact of FSMA may not be felt until several years after its implementation. The FDA and Cornell University are working together to bring farmers and those who advise farmers up to speed on FSMA. They attempt to quell farmers’ concerns by saying they are there to help them negotiate the process. That is all well and good, but for farmers like us, time and money are two commodities that they cannot supply and are what we need the most to implement the regulations and keep farming.

P.S. A neighbor and long-time fellow farmer just stopped by and told us this will be his last year farming.  He has done farmer’s markets for years.  The increase in wages is the nail in the coffin for him.  His son will likely buy his farm, so it will remain in the family which is wonderful, but this is another example of how tough it is for small farmers right now.

P.S.S. Another neighbor and long-time farmer just sold his farm to a corporate farming operation. That means there is now only one other small family farmer in our vicinity.

Food Safety and Education: What they have in common

Food safety looms large on the political landscape nowadays.  Various well-known individuals and organizations are crying for the Food Safety Modernization Act (FSMA) to be moved out of the budget committee and on to a vote.  Meanwhile the 2012 Farm Bill has yet to be passed with the September deadline fast approaching.  Then there’s the re-authorization of the Elementary and Secondary Education Act (ESEA), better known as No Child Left Behind (NCLB), that is stalled in the legislature as well.  What do these bills have in common, besides their delayed passage?

I may have a unique perspective on this question since I was a classroom teacher prior to NCLB becoming law in 2002.  I am now the person responsible for the paperwork that FSMA will likely require of farmers.  What I find interesting about the politics of these bills is the similarity in language used by those who support or oppose these various policies.  For example, those upset over the delay of FSMA claim that either the Obama Administration or the Republicans are responsible.  Fingers are also wagged at the food industry.  Blame and finger-pointing often accompany dissatisfaction with the lethargic pace of the political process, especially for bills that will affect the lives of a large proportion of society’s population.  Others see the delays as being deliberative or showing sensitivity to those who will be most impacted by the proposed legislation.

Another commonality of political language is exaggerated claims of the potential dire consequences if the bill should pass or not pass.  In the case of NCLB, the claim of an undereducated class of students, those left behind.  The punitive measures to be taken against schools and districts that didn’t meet their annual goals was assumed to be an incentive, but created anxiety for students, teachers, and administrators.  Claims that passage of FSMA is needed to prevent further food-borne illnesses play on the anxieties and fears of the general public regarding food safety.  These exaggerated claims may or may not prove to be true.  They primarily serve to elicit support for or opposition to the bill.

Last, but not least, is the use of stories to garner support for a particular stance.  Of course, the stories differ depending upon the position of the speakers.  Stories are important because they tend to elicit emotional responses in the audience.  Stories may be as short as a headline or as long as a book.  A story has a beginning, middle, and end.  What makes stories so powerful are not so much what they tell, but how the audience perceives or interprets them.  Perceptions are based on the values one holds dear.  The recent Stanford study on organic and conventional foods is a prime example.  This is research, supposedly an objective endeavor, whose results were based on a study of other research.  Yet, the responses it elicited ranged from celebratory to hyper-critical.  The title of the study alone tells a story that has elicited a plethora of responses.

Whoever reads this post may shake her/his head and think, “I knew this already.  That’s just politics as usual.”  That’s what’s so amazing.  That people know this about politics, but fall for it anyway.  To test my theory, go to the following link and watch the video from the CBS This Morning show then respond by posting a comment.  I can’t wait to hear what you have to say.

CBS This Morning Video